I own a house and I have a roommate who pays me rent. Where do I include this income on my tax return?

[DJS · Accepted solution]

As above, you will report rental income and expenses on Schedule E. The usual way to determine expenses when you rent a part of your house is to divide the area of the part in which the renter has exclusive use by the total square footage of the house, and use that to prorate expenses for things like utilities, mortgage interest, insurance and taxes. For more information see this IRS publication: http://www.irs.gov/publications/p527/ch04.html

In particular see the section on Renting Part of Property which says, in part:

How to divide expenses.   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between rental use and personal use. You can use any reasonable method for dividing the expense. It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. The two most common methods for dividing an expense are (1) the number of rooms in your home, and (2) the square footage of your home.

[Harry11]

Rental income and expenses from the rental of residential property is reported in the Rentals and Royalites section of Wages and Income.

• Go to Federal Taxes
• Click on Wages and Income
• Click on Explore on My Own
• Scroll down to Rentals and Royalties, click on the start or update button

Rental income is reported on Schedule E (Form 1040).

You basically treat the rented section as a separate part of your property.

More Information:

http://www.irs.gov/publications/p527/ch04.html#en_US_2013_publink1000219159

[gotsher79]

Hi.  How would you divide expenses when the person paying you rent is sharing the whole house, with the exception of your bedroom?  In the case I'm trying to understand, one roommate recently purchased the home that she and her roommate have rented together previously.

[AmyC]

The renter should have an exclusive area that is only theirs, like a bedroom. @DJS answer is great. Utilities, trash, etc can be any reasonable method- documented in case of audit and used consistently throughout the rental time.

@gotsher79